Pls use this Quick Take Asia 1142x160

Global Market Quick Take: Asia – October 2, 2023

Macro 4 minutes to read
Charu Chanana 400x400
Charu Chanana

Chief Investment Strategist

Summary:  US stocks were flat to lower to end the week and the quarter, as the initial strength following the softer PCE was reversed amid rebalancing flows. Major indices posted their worst quarterly performances in a year with higher-for-longer message reverberating through the markets, also Treasury yields steadied on Friday. Risk sentiment could get a boost with US shutdown averted for now, and focus remains on auto strikes and consumption trends into Q4.


The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events. 

MI 2 Oct 2023

Equities: US equity futures rose higher on Monday at the Asia open with a US government shutdown averted for now after a weekend deal. Softer PCE tone was offset by upward revisions in UoM sentiment and its price gauges. Many markets, including China, HK, India etc. remain closed today so volumes may remain thin, and focus will turn to PMIs later in the day.

Fixed income: Treasury yields steadied on Friday after a dip earlier on the PCE data but upward revisions to the Uni of Michigan survey consumer inflation expectations capping further upside in Treasuries. 2-year yields ended the day down 1.5bps while 10-year was down 0.4bps, and European yields also slipped after a jump higher earlier in the week.

FX: Dollar was muted on Friday but closed nearly unchanged with CAD leading declines but NZD in strong gains. USDCAD rose from lows of 1.3417 to 1.3585 as oil prices cooled. NZDUSD rose to 0.6049 amid improved risk sentiment and weaker yields, before easing to sub-0.60 handle. AUDUSD also touched the 0.65 handle and both RBA and RBNZ announce rate decisions this week. EURUSD back below 1.06 while USDJPY sees little respite, and continues to trade around 149.50, despite the lower Treasury yields.

Commodities: Crude oil prices resumed their ascent at the start of the week after slumping lower on Friday but having recorded the biggest quarterly advance since early 2022, and focus turns to Adipec summit in Abu Dhabi this week. Gold slumped by close to 4% last week, having broken below $1850 amid the relentless rise in long-end yields. Wheat plunged 6.4% on Friday to a three-year low at $5.415 after the USDA said domestic production was 4.5% higher than expected.

Macro:

  • US headline PCE met expectations as it rose to 3.5% YoY from July’s upwardly revised 3.4%, while the MoM print was higher at 0.4% (vs. 0.2% prior and 0.5% expected). Core PCE however cooled to 3.9% YoY as expected from 4.3% prior and 0.1% MoM from 0.2% prior and expected. Core services PCE ex-housing, Fed’s key measure, also cooled. Income and spending remained robust and there were also significant revisions to historical numbers, suggesting Q3 GDP growth in the US could remain strong and higher-for-longer could have more room to run.
  • Euro-area inflation dropped to 4.3% YoY from 5.2% in August, coming in below expectations of 4.5%. Core inflation fell to 4.5% from 5.3%, also below consensus expectations of 4.8%. While base effects and energy contributions were at play, downside surprise also came in core categories, suggesting ECB could stay on hold.
  • The US Congress passed a last-minute stop gap bill to keep the government running for 45 days. The deal, which doesn't include new Ukraine funding, keeps the lights on until November 17, buying time to negotiate a longer-term spending package but risks to speaker McCarthy’s job have increased.
  • China’s PMIs were in expansion territory for September signalling preliminary signs of a bottoming out in the economy. Manufacturing PMI came in at 50.2 vs. 49.7 in August, while non-manufacturing was at 51.7 vs 51.0 in August. However, expansion in Caixin PMIs moderated with manufacturing at 50.6 from 51 in August and services at 50.2 from 51.8 suggesting that private businesses and exporters still remain under heavy pressure.

Macro events: EZ/UK/US Final Manufacturing PMIs (Sep), US ISM Manufacturing PMI (Sep), Chinese Market Holiday (Sep 29-Oct 8)

In the news:

  • BAE Systems Wins £4 Billion UK Contract for Nuclear Submarines (Bloomberg)
  • Tesla Revamps Model Y in China, Keeps Starting Price Unchanged (Bloomberg)

 

For all macro, earnings, and dividend events check Saxo’s calendar.

For a global look at markets – go to Inspiration.

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

Content disclaimer

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Bank A/S and its entities within the Saxo Bank Group provide execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

Apple and the Apple logo are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.